Housing crunch cuts into Sevier workforce

8/7/2017

Sevier County has plenty of jobs, but not enough apartments. That deficiency is keeping jobs open even as tourism has revived after the November 2016 wildfire.

“Our unemployment rate has gone to 2.6 (percent), which is historically low,” said Allen Newton, Sevier County Economic Development Council executive director. “All of our employers are needing employees now that school is getting ready to start back; college kids are going back to school.”

Only 13 of Tennessee’s 95 counties had rates that low or lower, including Knox at 2.5 percent, according to the Tennessee Department of Labor & Workforce Development.

Rental housing at capacity

But rental housing in Sevier County is “at capacity,” according to a study dated May 25 by Knoxville real estate appraiser Nelson Pratt of Hodges & Pratt Co. It was commissioned by the SCEDC before the November fire, and revised to include the fire’s impact, Newton said.

Pratt concluded Sevier County needs 1,500 to 2,000 units of rental housing, with 350 to 500 in Gatlinburg alone; and demand is increasing.

“During our research, it became evident that employers are expressing concerns about their ability to attract a quality workforce, due in part, to the lack of available housing,” he wrote.

The November fire damaged or destroyed 2,545 buildings, of which 2,449 were residential, according to Pratt’s tally. In that loss were 232 rental units, including motel rooms rented by the week.

“The actual number of renters is unknown given the overcrowding of some of these units,” the report said.

According to U.S. Census Bureau data, 931 housing units in Sevier County were substandard or overcrowded even before the fire.

Some “lacks complete plumbing.”

“We believe these numbers to be higher than stated since hotels are not captured within these statistics; particularly for Gatlinburg,” the report said.

The tourism impact

Sevier County, with a population around 97,000, lives on tourism. It has the third-greatest economic impact from tourism in the state, behind only Davidson and Shelby. The county’s biggest employer is Dollywood, with 3,100 workers. Of the top 15 employers, nine are attractions, restaurants or stores; the other five are schools, health care, or local governments, according to the study.

Someone working for minimum wage would have to work 74 hours per week to afford a two-bedroom apartment, Pratt found. Someone earning the average wage among renters in Sevier County would have to work 63 hours per week to afford the same. A household needs one full-time wage of $13.38 per hour to afford a two-bedroom, the most common apartment type in Sevier County, according to the study.

“We are aware that there are many in the workforce that are working double shifts or working two jobs,” Pratt wrote. “Specific numbers are unknown, but this is understood to be an issue in this market.”

Households paying more than 35 percent of their income for rent are deemed “rent-overburdened.” More than one third of renters in Sevier County meet that description, the study found.

Affordable housing has been a problem in Sevier County for more than a decade, but it eased during the Great Recession, Newton said. Now that employment and home prices have risen again, the issue has returned.

Land costs an issue

As before, the cost of land is a major deterrent to developers. To be suitable for apartments, a plot must be relatively level, near transportation, and connected to public infrastructure, Newton said.

“When you look at all those three things coming together, property in Sevier County is not cheap,” he said.

The report offers four suggestions for housing-construction incentives, urging heavy involvement by local governments:

»Housing vouchers or rent supplements;

»Free land for housing developers; »“Master leases” by major employers, offering housing to attract workers; or

The economic development council has been looking at incentive ideas for some time, Newton said. Members will study the survey’s recommendations and how housing development is funded in other places, he said.

“Housing is a really, really important thing for us to work on and solve,” Newton said.

Hunting and commuting

For 20 years the SCEDC has held a job fair in the spring, but the current situation demanded more, Newton said. His organization and related groups sponsored two more job fairs, on July 20 and 25. Each boasted nearly 50 booths from area attractions, stores, hotels and restaurants; some factories and temporary employment services; and state and local agencies.

The second job fair was held at Rocky Top Sports World in Gatlinburg. Jobseekers Melissa and Troy Keith were no strangers to that location.

“This is where we stayed when the fire hit,” he said, as they filled out generic application forms. It was two weeks after the Nov. 28 fire before they could return home to downtown Gatlinburg.

Melissa Keith said she has worked at Dollywood for four years. She’s officially full-time, but hasn’t been getting enough hours.

“I’m just looking for a second job right now,” she said. She hoped to find work as a cashier or photographer, to match what she does at Dollywood.

Troy Keith has been applying for jobs online. Barring a couple of brief stints at hotels, he has been jobless for eight months. Just before November’s fire he started as a housekeeping inspector at Westgate Smoky Mountain Resort & Spa, which took heavy damage.

“I’m hoping to get back on at Westgate because they pay $11an hour there now,” Troy Keith said.

Until that call comes, Melissa Keith said, they still need a second income.

“You need to look for something else just in case,” she told him.

The wildfire effect

Copper Cellar restaurants owns the Gatlinburg Calhoun’s and two other restaurants in Sevier County, and November’s fire cost them a dozen employees due to housing losses, Calhoun’s General Manager Jeff Christian said.

“It’s still going on because people are still unstable with their housing and transportation,” he said.

The restaurant is fairly well-staffed at the moment, but Christian had a table at the job fair anyway. Employees are staying longer because area businesses are raising pay and making other efforts to compete.

Not long ago, many local jobs started at $8.50 an hour, but competition for employees has driven many places to start around $11, he said.

Commute times and a shortage of housing increase that pressure. Christian drives 40 minutes to work each day, and some of his employees come from Cocke, Jefferson and Knox counties.

Inventory and income

Nearly 44 percent of Sevier County workers live outside the county, Pratt found.

“Cocke County supplies a lot of Gatlinburg’s workforce,” Newton said.

Relatively low pay, high land costs, lack of transportation and a shortage of suitable sites are the main reasons for the housing shortage, Pratt found. There’s not really a shortage of available units — the county has more than 28,000 “hotel/motel, condo/cottage, time shares, camping/RV, and bed and breakfast” rooms. There are more than 7,000 rental cabins; “Seasonal/Recreational/ Occasional” housing is about 28 percent of total county housing inventory. But those cater to tourists, not residents.

At the time of the 2010 census, Sevier County had 7,206 mobile homes, nearly 13 percent of the total housing inventory. The trailer parks Pratt surveyed reported they were full; for a three-bedroom trailer, rents ranged from $635 to $1,061.

In 2016, Sevierville had 3,224 renter occupied households, according to the study. Pigeon Forge had 1,207, Gatlinburg had 718, and the rest of Sevier County had 12,898. All those were expected to grow by about 6 percent over the next five years.

Pratt tallied 20 existing apartment complexes, all with waiting lists. Not much is under construction. A 27-unit project at Ober Gatlinburg is for foreign workers on summertime work visas, but there is phase two of the Overlook at Allensville Square, with 144 units, in Sevierville. In the planning stages are 150 units in Pigeon Forge, 22 units on Ski Mountain Road in Gatlinburg, and five projects with an unknown number of units in Sevierville.

Eight hundred to 1,000 of the needed rental units should be “affordable” housing for lower-income families, Pratt’s report concluded. Households with incomes below $35,000 weren’t included in the demand numbers, as they weren’t likely to qualify for “conventional development,” even at Sevier County’s relatively low rent levels.

Thirteen Sevier County apartment complexes count as low-income housing, with a combined 696 affordable units, according to the Tennessee Housing Development Agency website. To be eligible for low-income housing in Sevier County, a family of four would generally have to earn less than $26,300, according to THDA.

In February, THDA announced $1.4 million in low-income housing tax credits to help rebuild after the November wildfire, with each dollar of tax credit expected to enable $10 in development. That should enable $12 million to $15 million in equity for developers, THDA Executive Director Ralph Perrey said.

Six projects in Sevier County have applied for low-income tax credits, hoping to build 441 units: 76 in Gatlinburg, all the rest in Sevierville. The report projects that at least some of those projects will get tax credit backing.

Pratt found eight real estate listings with a total of 223 acres of land suitable for apartments, but at costs of $24,017 per acre to $205,696.

At those prices, a 100-unit complex would have to charge about $1,000 for a two-bedroom to be feasible, Pratt figured. If a developer got the land for free, that could bring rent down to about $920.

That’s the incentive Newton prefers: using government to help private developers get land free or at a nominal price, in exchange for housing local workers can afford, he said.

There is no timeline, but talks are underway between economic development officials, Sevier County and its three main cities, Newton said.

“We’ve been working on it pretty hard for, I guess, about four months,” once officials could get out of “reaction mode” to immediate fire-recovery needs, he said.

Supply and demand

Wage pressure was apparent at the July 25 job fair. Krystal Kilgore was offering $13 an hour, full-time, with benefits, at the new Otics USA plant in Morristown.

But she suspected many in attendance could afford to be “lookers.”

Otics makes engine parts for Toyota. It employs about 40 but Kilgore, general administration department head, is looking for about 20 more.

“With the unemployment rate so low, we’re having some difficulty recruiting people to fill our positions,” she said. The factory already draws from Sevier, Jefferson, Cocke and even Knox counties.

One such browser was Jay Seaton of Sevierville, a retired teacher who wants a part-time job.

“I’d rather be active than passive, so that’s why I’m here,” he said. Most employers wanted full-time workers, but he found a couple of possibilities.

“One of them offered me a job on the spot,” Seaton said.

Like many Sevier job-seekers, Seaton could afford to be choosy. The previous week he had quit an asphalt-work job after 61 ⁄ 2years when it got too hot to be worth his while, he said.

Victor Basinger, human resources specialist at the Lisega plant in Kodak, said “There are a lot of people who are working, and there are not a lot of people who are hunting.”

Source: Knoxville News Sentinel by Jim Gaines

The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org